Prescription Drug Trends and Their Effect on Health Plan Costs - Part Two
Part two of a two‐part series for employers facing rising drug costs
Between 1999 and 2015, health insurance premiums for employer‐sponsored plans soared 203 percent, according to the Kaiser Family Foundation. One of the drivers of those increases is rising prescription drug costs. Drug costs spiked in 2014, explains Pam Olson, Employee Benefits Account Executive, Johnson Insurance. “In 2014, prescription costs went from 3 to 4 percent annual increases to 10.2 percent,” she notes, adding, “2014 also saw a 19.2 percent rise in specialty drug costs.”
Continuing pharmacy increases forecast
The Kaiser Family Foundation projected that prescription drug costs would be approximately 10 percent of total health costs for plans in 2017, and the percentage is forecasted to increase slightly over the next several years. In 2017, specialty drug costs are projected to account for 35 percent of overall prescription drug spending by health plans. With double‐digit annual increases, this may exceed 50 percent by 2020.*
Strategies to face the challenges
Health plans have employed strategies to control rising prescription costs. Consider these approaches, and be sure to read part one of this series for more cost‐controlling ideas.
Use Pharmacy Benefit Manager (PBM) clinical programs:
- Prior authorization – helps ensure appropriate, safe use of medications by requiring authorization prior to covering the cost of expensive, high‐risk medications that are subject to off‐label, experimental or improper use.
- Step therapy – requires trial of a preferred alternative before a higher‐cost, non‐preferred drug is covered within selected therapeutic categories.
- Quantity limits – restricts the quantity of selected drugs to minimize waste and ensure prescribing consistent with Food and Drug Administration and manufacturer dosing guidelines.
- Specialty split‐fill program – limits the covered amount of a specialty medication being used by a member for the first time. Instead of a 30‐day supply, members might receive a 15‐day supply for half the copay. It limits waste on medications that don’t work as desired for that patient.
- Concurrent and retrospective drug utilization review – identifies trends in pharmacy claims to enhance patient safety. For example, these reviews can help detect potential drug interactions or plan members who may be doctor shopping for opioid prescriptions.
- Disease management programs – improve the health of members with specific chronic conditions and reduce costs associated with avoidable complications.
- Adherence monitoring – aims to reduce the number of patients, estimated at 25 percent or more, who don’t take their medications as prescribed. Increased medication adherence can provide significant health benefits and reduce overall health care costs.
Additional opportunities to manage prescription drug costs
- Make use of a specialty pharmacy for specialty drugs mandatory. “Requiring use of a specific specialty pharmacy can provide better care with education, monitoring and outreach programs to support the member and his/her physician,” Olson explains. Mandatory use of a specialty pharmacy can also provide deeper discounts which result in lower out‐of‐pocket expenses for the member and lower costs for the plan, compared with retail pharmacies. Specialty pharmacies are also better equipped to meet the requirements for proper storage and shipment of these high‐cost specialty drugs.
- Choose a PBM with fraud, waste and abuse prevention programs. As intermediaries between insurers and the health care industry, pharmacy benefit managers are well‐positioned to monitor prescription drug usage to help keep pharmacy costs down by identifying fraud, waste and abuse with prescription drugs.
Turn to a trusted partner
An insurance partner with expertise in the ever‐evolving health insurance market can help you stay abreast of changes and put you in a position to offer attractive employee benefits at an affordable cost. Contact your insurance advisor today to learn more about how we can help your business and your employees.
*Source: Segal Consulting, “Double Digit Rx Benefit Cost Trends Projected for 2017,” Fall 2016.